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Mineral Resources plots lithium demerger

Mineral Resources

Mineral Resources has suggested foundations have been put in place to assist demerging the company’s lithium assets in the future.

Speaking at MinRes’ 2021 annual general meeting (AGM), chief executive officer Chris Ellison suggested that while a demerger could be a possibility, the company wanted to maximise the assets first.

“We’ve set it up in such a way that that’s possible. At the moment, it’s way too soon. If we’re going to do that, we want to get full value out of where we’re heading,” Ellison said.

“So, ideally, we want those mines in full production and we want all of the downstream hydroxide coming off them.”

MinRes owns a 50 per cent interest in the Mt Marion lithium mine near Kalgoorlie and 40 per cent of the Wodgina lithium mine in the Pilbara.

In October, MinRes announced it would be restarting Wodgina alongside joint venture company Albemarle Corporation in the third quarter of 2022.

The mine was placed on care and maintenance in November 2019 due to weak market conditions.

Optimising the output of lithium hydroxide – a downstream product – is a big priority for the company, given its high value.

According to the London Metal Exchange, as of November 11, the spot price for min 56.5 per cent LiOH2O lithium hydroxide was $US29 ($40) per kilogram.

“Roughly, if you think about it, for every seven tonnes of six per cent spod (spodumene concentrate), it’ll turn into a tonne of hydroxide,” Ellison said.

“So, the businesses that I said are set up in such a way that that (a demerger) can happen and look, I have no doubt that history tells you that it probably will happen.”

Ellison said his company had the capacity to weather the current iron ore storm, which has seen prices tumble to below $US90 per tonne in the back half of 2021.

Iron ore is MinRes’ most profitable commodity and Ellison believes there’s much positivity to come from this side of the business in the next two to five years.

Ellison said the price crunch has also been compounded by labour shortage-related headaches, however he was confident the company would manage.

“The last couple of years have been fairly tough, we’ve been in different conditions that we’ve never operated in before,” he said.

“We’re getting the hang of it now, it’s all around managing our people and it’s certainly going to get a lot tougher going forward than it has over the last 12 months.

“The challenge is out there but it’s not my first rodeo, it’s not my second. I think we’ll work through this, we’ll grow the business, and we’ll keep developing with all the commodities we have in the mining services sector.”

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